My Assignment Help

Demand for money Assignment Help

What do you mean by Demand for Money?

‘Demand for money’ is an expression which is used to describe the desired money which is being held up as in the form of financial assets like bank deposits or cash. In ‘Demand for money’, M1 is denoted to the non-interest-bearing holdings of the individuals whereas M2 and M3 is for money which is in much broader sense in comparison with M1.

M1 is actually a type of demand for money. It is sensibly dominated with its store of value due to the interest bearing assets. But because money is very needful for carrying out the transactions, it have has its liquidity. Due to this, a minor trade off gets started between the interest advantage of holding and keeping other assets and the liquidity advantage of holding the money. Generally, the nominal base demand for the money gradually increases, and this increase is due to the level of nominal output and eventually decreases with the nominal interest rate. The real definition for the demand for money is said to be the nominal amount of money divided by the price level.

What are the main functions of the Money?

The two main functions of money are:

1. Store Value

Money acts as a store value. The real value of money remains the same which eventually helps up in storing up the value for the money. Money acts as an asset when its value is stored and can be used extensively in future.

2. Medium of exchange

Money also acts as the medium of exchange. When transaction are made, money is the value which is exchanged with the goods or services. It is a very prominent exchange system. The money offered in exchange is the price of the concerning product or service which the seller is charging.

On making some deductions and conclusions on these two functions of money, some economists were able to develop two concepts to help withstand this theories. These are:

The classical approach:

As per the old theories of economists, the direct demand for money is not a thing. Money I used purposely by its user to buy goods and services. Due to this, there is an indirect demand for the money. The demand for money is reflected because of the particular period of time which is used with it. According to them, the total demand for the money depends directly upon the total supply of exchangeable goods and services which are provided by a target market.

The concept of Store of Value:

This theory was deducted by the modern economists. As per them, the demand for money was directly related to the demand for holding the cash balances. As per the economists, the general public uses and desires money not only for just buying goods and services but also with a view of keeping the money in the form of wealth. This increases the wealth prestige of individuals. This wealth is helped to convert it into another form of wealth which is more convenient as per the need. Hence, the demand for money is direct and straight.

If you have any doubts or confusion to be cleared, you can choose our Demand for money assignment help desk and can take help from any of your specific tutors of your choice. The tutors which are connected with you will provide you with some extra study materials to get you through with the subject with ease. Our services are available 24*7.

What are the different motives of holding the money?

There are different motives for which the individuals keep their money, these are:

1. Transaction motive

Transaction motive is the motive for demanding the money results from the need and acquiring for the liquidity. It is done for the day to day transactions which are done in the present and in the future. This type of need is arises when the source of income is only once in a time. It is said for the once in a month. The money is received discrete and very limited amounts but the expenditures and transactions which are done on these amounts are continuously. There are three parts of Transaction motive:

Quantity theory

Quantity theory is the most basic and the classical transaction motive for demand for money. It can be illustrated with the reference to the Quantity Theory of Money. The equation which is studied mainly, MV = PY in which M stands for the money, V is for the velocity, P stands for the price level in the market and Y is the real income. As a result, PY is as nominal income with the other graphs set with the transactions carried out within the economy during a certain period of time. AS a result, this formulation of the transaction motive activates the demand for money as a function of prices as well as the real income from the relation of velocity which is constant.

Inventory models

Inventory models is basically the total amount of money which is demanded exclusively for the sole purpose of transactions and money exchange. It is however more likely to depend on the nominal interest rate for which the money is acquired. This change arises as a result of the lack of synchronization within the time between the purchases which are desired and the factor payments which are made for that. This includes salaries as well as wages. The workers wish to get the money income more than once in month as they wishes to make the purchases, due to this demand for money.

Micro foundations for money demand

The model provided by Baumol and Tobin provides a legit and explaining microeconomic form which is used for the type of the nature of the money demand function and is usually way too stylized to be included with the modern macroeconomics models. It is studied elaborately with the dynamic stochastic general equilibrium model. Due to this, most of the economic money models resorted for the simpler and indirect methods for the capture of the transaction motive spirit. The two most famous and commonly used methods are the cash in advance model and the money in the utility function also known as the Sidrauski model.

2. Asset Motive

This is a motive in which the people demand extensively for the money for a more type as wealth. People holds the money as a wealth and wealth indicator. The money is carried out for the transactions which are made but this very approach stats the other way also. This approach mainly focuses on the potential return expected on the various assets and transactions which act as an additional motivation. The portfolio motive is a part of this asset motive. The portfolio motive looks upon the demand for money again and again which requires for carrying out of transactions. James Tobin laid out the basic framework of work for this. Agents are used in this and they charge money for their services also making up for more money disposal.

As we have seen that Demand for money is a very deep and complex subject but the richness and knowledge bank of this subject is vast. But sometimes, due to its complex nature and detailed virtue, it gets hard upon the students to grasp every topic at once, which eventually results in non-completion of projects, assignments and homework which is assigned to them by the school or college. But, you don’t have to worry no, our team of professional tutors are here for your help, who are willing to work upon your assignments and projects and help you get that good grades. Our team of tutors follow the deadline completion pact and also guarantee a 100% plagiarism free work at a very affordable price. We bet you will not get any better services than ours at this price range. Our tutors are professionals from universities and high schools which have excelled in their projective field. Demand for money is a very tough subject which gets over the head of the students sometimes. Our tutors use the study material which is very easy to understand and get the grasp of the subject. It will help the students in preparing for the tests also. We are available to help 24*7 with our tutors. Contact us from our helpline number or visit our website, myassignmenthelp.net and check various other service that we provide and other offers. We are looking forward for your call.

Myassignmenthelp features:

Best quality guarantee : All our experts are pro of their field which ensures perfect assignment as per instructions.

Best price guarantee : We deliver quality work at very competitive price, We know, we are helping students so its priced cheap.

Always open : Our support team and experts are available 24x7 to help you.

Plagiarism free : All our work is checked by plagiarism checking software like Turnitin to ensure you get non- plagiarised assignment. All our work is original and unique.

Deadline guaranteed : Myassignmenthelp always deliver work before deadline so that any query can be resolved in time. View All

Myassignmenthelp reviews

I am doing post-graduation in mechanics. There are lots of numerical in this subject and it becomes difficult for me to manage time for the same. So I switched to this assignment help site for a simple and easy solution. Surprisingly, I got more than what I expected. All my doubts were cleared on time and it became easy for me to attempt questions in the exam without any mistake in between. All my friends were eager to know behind my progress and improving grades and I can proudly tell them about this site.

Nancy, Australia

First time I got noticed by the teachers in the class of 100 students that too in a good way. Yes, when a twisted question was put up by the teachers for all the students, nobody came forward to solve the given question. But after some minutes collecting all my strength and confidence, I step forward and solved the problem. The feeling was so amazing and this became possible because of you guys. The tutoring class from your site came out to be so effective that now I can confidently solve even the difficult question within some seconds. Till now I have not found any other tuition institute that helps in the fast progress of the students.

Smith, Australia

Excellent guys... You are doing a great job. Only you can be the best choice for the students and only one reason would be insufficient to describe this fact. Effective service, timely completion of all the given work, quality, low price, use of advanced technology and many more of such services are provided by this site. I enjoyed lots of these benefits, anybody who is using this site for the first time, I assure them that you will never go for any other medium once you get in touch with the teachers here.